Gazillions

Neal Ascherson

  • McMafia: Crime without Frontiers by Misha Glenny
    Bodley Head, 432 pp, £20.00, April 2008, ISBN 978 0 224 07503 9

In the courtyard of Steam Baths Number Four, on Astashkina Street in Odessa, there are two marble plaques with bunches of flowers laid on the ground beneath them.

The first is engraved with the image of a man in his mid-forties, sporting cropped hair and looking sleek in a suit over a T-shirt; the second has on it a poem written by his closest friends after he, Viktor Kulivar ‘Karabas’, was felled on this spot by 19 bullets from an unknown assassin’s semi-automatic: ‘The sacred clay holds the remains/Of Viktor Pavlovich, our dear Karabas’.

Karabas was gunned down in 1997. He and his mob had taken over the port city of Odessa as law and order disintegrated in the wake of the Soviet Union’s collapse. One might call his reign a comprehensive protection racket. But, looked at in another way, Karabas became the only reliable source of authority and social discipline. He arbitrated the city’s commercial disputes (10 per cent of net profits was his price); he kept the drug peddlers to one area of Odessa, and prevented the horrific people-smuggling in the harbour district from infecting the rest of the town. Using a bare minimum of thuggery, he kept the peace. Karabas seldom carried a gun. Everyone looked up to him, and levels of violence stayed lower in Odessa than in other Russian and Ukrainian cities. His murderers were probably Chechens hired to break Odessa’s grip on the local oil industry, a grip coveted by Ukraine’s then president, Leonid Kuchma, who ‘during his ten years in power . . . presided over the total criminalisation of the Ukrainian government and civil service’.

As Misha Glenny says, the rule of the great Karabas recalled the pre-1917 Odessa described by Isaac Babel, with its cast of fabled Jewish gangsters, such as Benya Krik, with his car-horn that played ‘Laugh, Clown, Laugh!’ Karabas was not a Jew, but fitted perfectly into that urban legend. ‘The more I spoke to Odessites of any nationality, the more convinced I became that he really was a heroic gangster who prevented social collapse and lawlessness.’

That remark shows one of the strengths of Glenny’s book. He is prepared to be shocked by the brutalities of organised crime, although it takes a lot to shock an experienced, war-scorched reporter like him. But, more important, he is prepared to admit uncomfortable truths. He makes clear that mobs, mafias and global rackets are often performing useful and occasionally vital social functions that no other institution – governments, legal systems, the police, the economy itself – is capable of providing.

It’s usually assumed that organised crime is a network of unqualified evil: murderous, recklessly greedy, the enemy of all human values and all hopes for better lives. Glenny’s book is a warning against such a simple view. No, big gangsters are not nice people: they get what they want through the threat or ultimate use of violence and blackmail. And it’s obvious that their operations can wreck the lives of millions through addiction or – as in the Balkans or Colombia – through the equipping and financing of local wars. But are the mobs and mafias really Public Enemy Number One? It would be shrewder to call them Government Enemy Number One: they are formations that deprive a state of revenue, of the monopoly of violence and law enforcement, and sometimes of international respect. The public, by contrast, may find them less dreadful – often, in fact, less dreadful than the governments that are supposed to be serving and protecting their citizens.

For centuries, pamphleteers have played with the fancy that the greatest thieves and murderers are not those dangling from the gibbets but those who sit on thrones or send armies into battle. Reagan’s War on Drugs, as total a failure as George W. Bush’s War on Terror, may indirectly have led to almost as many deaths – by destabilising Colombia, for example. It would be hard to think of any organised crime outfit responsible for a fraction of those two butcher’s-bills, in spite of all the murders of rivals and massacres of disobedient sub-gangs. Consider a monster like Ilya Pavlov, criminal emperor of Bulgaria in the 1990s; or dapper little Dawood Ibrahim Kaskar, who slaughtered hundreds in Mumbai with his bombs in 1993; or Viktor Bout, the globetrotting Russian who is the world’s most dangerous dealer in illegal weapons. These men are mere retailers in death. Governments, as the late Tiny Rowland used to say, are death’s wholesalers.

This is essentially a book of wonderful reporting. Although it has reflections at the beginning and the end, its matter is divided up into stories of Glenny’s expeditions into region after region. And in each place he visits, Glenny usually does four things. He meets somebody in the game who is prepared to talk and boast; he interviews a law enforcer (a whole gallery of brave, wise but usually pessimistic cops); he seeks out humble victims of the traffic or the racket; and he explains the local history of organised crime. Here and there, he pauses for a paragraph or so of analysis. His broad explanation for the huge growth of organised crime, which he repeats several times in several ways, is that it was the result of two convergent events: the collapse of the Soviet Union and its empire, and the global deregulation of finance in the 1980s. The end of the USSR created a vast territorial zone in which law enforcement ceased almost overnight to be effective, and mass unemployment followed the implosion of the state economy. The freeing-up of currency flows meant that gains, mostly but not quite all ill-gotten, could be pumped abroad and laundered through an infinity of banks and property deals. Russia experienced ‘the biggest single flight of capital the world has ever seen’. In 1994, more than $1 billion a month was draining from Russia into Cypriot banks alone.

Glenny puts a lot of emphasis on ‘protection’, as a primary mafia activity in Russia, Eastern Europe, the Balkans and elsewhere. As he shows, this was a response to demand. The state had almost given up law enforcement, and organised crime stepped into the gap. In Russia, criminal outfits like the mighty Solntsevo Brotherhood, led by the ex-wrestler Mikhailov, not only provided bodyguards but also took on the enforcement of commercial contracts.

Was Boris Yeltsin’s sale of public resources – oil, gas, diamonds, and copper flogged off at dirt-cheap prices to a few incredulous young bankers – a criminal act? Glenny calls it ‘quite simply, the grandest larceny in history’. The sell-off certainly gave a huge boost to organised crime. The billionaire oligarchs Yeltsin created were not themselves syndicate gangsters; their own personal crimes were petty stuff like nationwide bribery and gigantic tax fraud. But the new wealth required protection for its businesses and safe-conduct abroad for its cash. Here was the opportunity for organised crime to create a ‘gated landscape’ in which the oligarchs could flourish; and the demand for money laundering allowed the gangs to spread from Russia.

A second sort of big crime, smuggling, is even more traditional than protection. In the 1990s, the world became a perfect environment for mafias. Neoliberal free trade meant that clean or dirty money could go anywhere. Meanwhile, the exceptions to free trade – commodities such as drugs, cigarettes, weapons, prostitutes and immigrants, which governments still feel obliged to regulate – could be smuggled in previously undreamed-of quantities. Nowhere was this growth more spectacular than in Glenny’s old beat, the Balkans, where the list of highly taxed consumer imports was enriched in the 1990s by goods banned under international sanctions: oil and armaments in particular. The result was an enthusiastic alliance between local mobsters and governments. Milo Djukanovic, the ruler of Montenegro, kept his tiny country solvent on cigarette smuggling across the Adriatic to Italy. I have my own memory of the long trains of tanker wagons grinding across the Ukraine steppe, heading for oil barges waiting on the Danube and bound for Serbia.

Smuggling, of course, includes people-smuggling. Some operations of global organised crime could be called victimless: cyberfraud on banks, for instance, or the vast ‘carousel’ swindles extracting phoney VAT payments from the European Union. But people-trafficking most certainly does have victims: the boatloads of humans cast adrift to drown or starve in the Adriatic or the South Atlantic, the Chinese workers asphyxiated in trucks on their way across the English Channel. On the other hand, the employers of smuggled labour – the pimps enslaving girls from Moldova, the gangmasters who let the Chinese cockle-pickers drown in Morecambe Bay – are often more guilty than the traffickers themselves.

Glenny covers both sides of this argument. In the Fujian province of China, for example, he confirmed that ‘snakehead’ people-smuggling to Western Europe and America is a service responding to a popular demand. Villages club together to raise the fearsome $20,000 minimum per person (why they don’t take a cheap package tour to Europe and then jump off the bus is a mystery), while local authorities run ‘Westernising’ courses for snakehead clients. As Glenny puts it, the smugglers are effectively travel agents for illegal entry, and are often regarded as heroes by their customers. The same couldn’t be said of the European trade in women, which is based on deception (‘a nice job as a waitress’), subjugation by rape and beating, and the threat to punish disobedience by attacking the girl’s family back home.

Glenny’s excitement in the chase after global crime, with its often grotesque and always revealing details, makes reading this book a rich pleasure. But he does not allow his excitement to let him forget those who suffer at the bottom of the heap. In Fujian, he sought out the bereaved families of the Morecambe Bay victims, now reduced to abject poverty as they struggle to pay off (with interest) their debts to the snakehead gangs that smuggled their men to Britain. In Chisinau, Moldova, he met Ludmilla, and listened to her story. Tricked into leaving home, she had been smuggled through Moscow to Cairo. From there, she was taken across the border into Israel by Bedouin traffickers who raped the girls in their charge (no sex, no food). When one Moldovan girl tried to escape, they shot her in the kneecaps and left her to die in the desert. Delivered to Beersheba, Ludmilla was auctioned by Russian Jews and bought for a Tel Aviv brothel, part of the gang empire of prostitution and extortion established in Israel by Russian immigrants. Glenny’s tours of red-light Tel Aviv, where Ludmilla serviced twenty men a day until she escaped, and his investigations into organised crime in Israel, make bleak reading.

At the heart of all the arguments about mafias and organised crime lies the issue of denied demand. People want something. Governments and international organisations say they shouldn’t have it, or only at prohibitively inflated prices. This denied demand instantly creates a network of illegal, criminal services. Neoliberals can retort: liberalise and legalise, then stand back and watch the mafias wither. This is not Glenny’s instinct. He has walked in too many dark places to believe in benevolent ‘hidden hands’, or in some Big Smiley in the sky blessing every want and lust. The ballooning demand in the rich West for narcotics and paid sex revolts him. All the same, he finds the arguments in favour of drug legalisation impressive.

In British Columbia, he meets Dan Wheeler, a trucker who regularly hid 50 lbs of ‘BC Bud’ cannabis in his fuel tank and delivered it to the United States, where it was worth $55,000. He visits gigantic underground dope factories hidden in the Canadian forests. He talks to Mayor Larry Campbell of Vancouver, and also to the extraordinary David Soares, district attorney of Albany, who has set out to reverse New York State’s Rockefeller Laws, which impose ferocious penalties for possession of minute quantities of drugs. The point here is that Canada is inclined to decriminalise, while the US (with exceptions like Soares) takes the opposite view. ‘The debate between Washington and Ottawa and the future course of narcotics policy,’ Glenny writes, ‘have enormous implications for the global shadow economy, for transnational organised crime, for international policing and for domestic policy across the world.’ The UN estimates that 70 per cent of the money in organised crime derives from narcotics. Reagan’s War on Drugs, meanwhile, cost billions of dollars but left the US with soaring drug consumption at rapidly falling prices. In a dacha near Moscow, Glenny interviewed Lev Timofeev, an expert on shadow and drug economies. ‘Prohibiting a market means giving the criminal corporations opportunities and resources for exerting a guiding and controlling influence over whole societies and nations,’ Timofeev has written. ‘International public opinion has yet to grasp the challenge to the world civilisation posed by it.’

Well, yes. But this is really a statement of the obvious. Prohibition makes gangsters. Dramatic and probably truthful statements, like the one Glenny attributes to US Marshal Matthew Fogg, that ‘the harm done to African Americans by the policing of drugs far outweighed the harm caused by the drugs themselves,’ don’t help much either. Some banned narcotics – though not all – harm people directly in ways no good society can tolerate. So full legalisation is not an option. Glenny seems to favour a form of nationalisation, a state régie monopolising narcotic sales. The funds used in the War on Drugs, he writes, will never compare to the ‘gazillions’ earned by organised drug crime ‘because Washington is determined to drive the market underground. The social and criminal problems related to drug abuse will never go away until the state can exercise control over the industry as a whole.’

It’s a mistake, anyway, to see organised crime as merely a shadow extension of the free-market economy. The unregulated market is itself largely a myth; it creates disorder and risks which require more policing and more public rescue interventions than the old Keynesian economies did. In the same way, mafias – grateful as they are to the world for transforming itself into a cash laundry – do not appreciate the joys of competition. They are cartels, seeking monopoly with gun and bomb as legitimate firms seek it with takeover bids. Neither are they keen on demand as a price determinant. I remember when, years ago, in Gorbachev’s Soviet Union, the Moscow meat markets were turned over to private enterprise. Towards the end of the first day, the stallholders reduced the price of the pork and veal joints that remained unsold. But then the men in black leather appeared. Their cut, they said, was a given percentage of the sale price. So the traders had to put the prices back up, and the meat stayed unsold.

Glenny compares his McMafias to the state-backed mercantilist venturers in foreign trade of the 16th or 17th centuries. ‘Had there been any laws to break, these adventurers would have been the first global organised criminal syndicates. Instead, they merely offended moral values by appropriating whatever they came across in exchange for alcohol and the clap.’ But there is a difference. The old venturers deliberately took colossal risks. The mob, in contrast, hates risk, and prefers stable, reliable income. Much mafia violence is conservative, trying to re-establish a status quo rather than blast its way to some unfamiliar prosperity.

The most enjoyable chapter of the book is Glenny’s exploration of the Nigerian scams. On the whole, it seems, the Nigerian big beasts do not like using violence, instead relying on gorgeous, buoyant impudence and the correct assumption that there is always another greedy fathead waiting to be fleeced. Consider the awesome fate of Nelson Sakaguchi, an eminent financier at the Banco Noroeste in Brazil. Sakaguchi let himself be persuaded to lend many, many millions of his bank’s reserves for the new Abuja airport. Flown to a summit meeting in a London hotel, he was received by the director of Nigeria’s central bank, the head of the aviation ministry and many other dignitaries. Unfortunately, they were all impostors. When the affair unravelled, it turned out that Sakaguchi was also paying out to a macumba priestess, who had claimed to need 120,000 white pigeons for a ritual that would protect Sakaguchi against fraudsters. For this, she got $20 million from a Cayman Islands account, but complained in court that she now needed 120,000 black pigeons to complete the spell. (At this point, the Brazilian judge collapsed with laughter.)

There is a fascinating section on Dubai, which prospered quietly from gold smuggling to India until the lifting of Indian import controls after 1991 deflated the trade. Then Dubai launched its incredible construction boom, gathering on-site – so Glenny rather improbably asserts – a third of the world’s cranes. This boom relied on investment from many of the globe’s biggest crooks, who had been attracted by Dubai’s no-questions policy about cash or previous convictions. Many of those figures were Indian, and the most important was Dawood Ibrahim Kaskar from Mumbai.

It’s surprising to learn from Glenny’s account of organised crime in ‘non-violent’ India that its mafias have probably killed more people than any other criminal outfit on earth. He met one of Dawood’s most experienced killers, and was disconcerted to find him ‘a warm, urbane man’ who said perceptive things about life and politics. ‘How did you feel at the moment when you executed a hit?’ Glenny asked him. ‘Like so many Indians, he chose a cricketing metaphor to answer: “Like Brian Lara when he hits the ball for six!”’ In Mumbai, Indian Muslim gangs like Dawood’s, Pathan gangs and Hindu gangs were in conflict. When rivals murdered Dawood’s brother Sabir, Dawood launched a frenzy of revenge killings and then fled to Dubai, from where he built up a criminal empire stretching from London to Kathmandu. In Mumbai his D-Company gang, smuggling gold and then drugs, dominated the city until the arrival of a Hindu fundamentalist government in Delhi created unexpected problems for it. Religious suspicions began to divide D-Company, and internal wars broke out.

Even more interesting is Glenny’s tale of the way those wars became ‘in part a proxy conflict between the intelligence agencies of India and Pakistan’. Dawood began to accept clandestine shipments of weapons and explosives from the Pakistani secret service, and hitmen from D-Company were trained how to use them in Pakistani camps. It was probably these explosives, packed into bombs, which killed more than three hundred people in Mumbai in March 1993.

The interpenetration of spooks and hoods is an important part of the McMafia story. It is uncommon for secret services directly to take over and steer mafias, as in Mumbai. In some Communist states, such as Bulgaria, the secret services set up their own semi-legal commercial empires before the ‘transition to capitalism’, and then recruited the criminal underworld as protectors and enforcers of their monopolies. More often, though, it is intelligence agents who offer their services to organised crime, during periods when lawlessness reigns and political police forces are being purged or dissolved.

This in turn is part of a situation Glenny constantly underlines: the poverty and weakness of most police forces in relation to the wealth and the transnational reach of the mafias they are supposed to be suppressing. Everywhere he goes, in Brazil or India, Ukraine or Colombia, Japan or Israel, Nigeria or South Africa, it is the same. In many of these countries, a lack of resources is compounded by the presence of politicians, judges and senior police officers on the mob’s payroll. And yet Glenny’s interviews show that there are dogged, honest, fanatically determined police officers who remain committed to this struggle all over the world.

Good as his book is, there are some questions that Glenny doesn’t fully answer. It’s strange that there is no section on the Sicilian/Italian mafias, ancestors of so much crime in Europe and the United States; the omission may be because Glenny considers them to be ‘family’ structures which are not truly global in their organisation, but this isn’t made clear. The question whether there really is such a thing as ‘mafia capitalism’, with its own characteristics and preferences, isn’t explored. It certainly isn’t identical with neoliberalism, or with early mercantilism. Finally, we still do not have a theory about the relationship between organised crime and the state. Glenny’s abundant reporting suggests that the relationship can take many forms, from the total hostility of the War on Drugs to the penetrated narco-state. But is it true that the structure of the modern nation-state is the real precondition for mafia activity? And, if so, is organised crime to be considered a parasite which must die when its host perishes?

Glenny ends with a call for action. The task, which no government wants to confront, is to regulate the global markets and above all the financial markets. National governments (including the British) which issue sanctimonious statements about global crime must start by closing down their offshore banking centres (the Caymans, the British Virgin Islands and so on), which are the world’s laundries for dirty money. There was a moment in the 1990s when regulation seemed possible. But nothing happened. Misha Glenny’s closing words are despairing: ‘Since the millennium . . . a hostile United States, an incompetent European Union, a cynical Russia and an indifferent Japan have combined with the unstoppable ambition of China and India to usher in a vigorous springtime both for global corporations and for transnational organised crime.’